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SUPREME COURT OF INDIA
Mohan M. Shantanagoudar, R. Subhash Reddy, JJ.
Oriental Insurance Company Limited – Appellant
Versus
M/s. J.K. Cement Works – Respondent
Civil Appeal No. 7402 of 2009
Decided on : 28-01-2020
(A) Consumer Protection Act, 1986 – Sections 21 and 23 – Insurance – Standard Fire and Special Perils Policy – Damage to stock of coal due to heavy rain – Appellant repudiated Respondent’s claim on the ground that loss caused to it did not fall within scope of policy, having occurred due to heavy and extraordinary rain and not flood or inundation – Compensation of Rs. 58,89,400/- alongwith 9% interest awarded by National Commission – Appellant had only appointed a Chartered Accountant for the purposes of verifying accounts books of Respondent regarding its daily stock of coal – Appointment of a Chartered Accountant for this limited purpose is not tantamount to appointment of a Surveyor – It is not the case of appellant that coal was not properly stocked or that there was any negligence on part of Respondent – Where there was no risk of water from a water body overflowing onto dry land where coal yard was located, it could not have been intention of parties entering into contract to give a restrictive meaning to term ‘flood’ – Such a narrow interpretation would lead to conclusion that insertion of term ‘flood’ was superfluous, which could not have been the case – Surveyor appointed by Appellant had also observed in its report that heavy rainfall had occurred in the area, causing flood-like conditions that resulted in some of coal kept in insured premises being washed off – Surveyor’s report also stated that there was accumulation of water due to heavy rains, that had caused coal to get washed off – Damage caused by heavy rainfall would not fall beyond ‘flood and inundation’ clause of Standard Fire and Special Perils insurance policies – Appellant directed to pay sum awarded by NCDRC. (Paras 6, 7, 12, 13, 14 and 15)
(B) Words and Phrases – Flood – Import – Flood may be described as overflow of water over land – Floods can be broadly divided into following categories: coastal floods, fluvial floods (river floods), and pluvial floods (surface floods) – Coastal floods occur when water from a sea or an ocean flows into nearby areas – Fluvial or river flood occurs when water level exceeds capacity of a river, stream, or lake, resulting in overflow of surplus water to surrounding banks and neighbouring land – They are usually caused by either excessive rainfall or unusually high melting of snow because of rising temperatures – Pluvial or surface floods refers to accumulation of water in an area because of excessive rainfall – These floods occur independently of an overflowing water body – Pluvial floods include flash floods which take place due to intense, torrential rains over a short period of time – Pluvial flood may also occur if area is surrounded by hilly regions from where runoff water comes and accumulates in low-lying area – In urban localities, because of concrete streets and dense construction, rainwater is unable to seep into ground – Steady rainfall over a few days or torrential rains for a short period of time may overwhelm capacity of drainage systems in place, leading to accumulation of water on streets and nearby structures, and resulting in immense economic damage. (Paras 9 to 9.3)
(C) Words and Phrases – Inundation – Import – Term ‘inundation’ can be used to refer to both act of overflow of water over land that is normally dry and to state of being inundated – Inundation can also be intentional, which is sometimes carried out for military purposes, as well as for agricultural and river management purposes – Overflow of water due to a flood may result in state of inundation. (Paras 10 and 11)
Facts of the case:
Present appeal arises out of the judgment dated 18.11.2008 passed by National Consumer Disputes Redressal Commission (NCDRC) in Original Petition No. 59 of 2005. Vide impugned judgment, NCDRC allowed the consumer complaint filed by the Respondent herein, directing the Appellant to pay Rs. 58,89,400/- to Respondent, along with interest @ 9% per annum from 01.06.2004 till date of payment.
Findings of Court:
Surveyor appointed by Appellant had also observed in its report that heavy rainfall had occurred in the area, causing flood-like conditions that resulted in some of the coal kept in the insured premises being washed off. Moreover, Surveyor’s report also stated that there was accumulation of water due to the heavy rains, that had caused coal to get washed off.
Result : Appeal dismissed.
JUDGMENT
Mohan M. Shantanagoudar, J.
This appeal arises out of the judgment dated 18.11.2008 passed by the National Consumer Disputes Redressal Commission ('NCDRC') in Original Petition No. 59 of 2005. Vide the impugned judgment, the NCDRC allowed the consumer complaint filed by the Respondent herein, directing the Appellant to pay Rs. 58,89,400/- to the Respondent, along with interest @ 9% per annum from 01.06.2004 till the date of payment.
2. The brief facts giving rise to this appeal are as follows:
2.1 Respondent herein (Complainant) is a cement manufacturer, having a factory in Nimbahera, District Chittorgarh, Rajasthan. These factory premises included an open coal yard, where a stock of coal that was used in the manufacturing process was stored.
2.2 The Respondent purchased a Standard Fire and Special Perils insurance policy from the Appellant herein for the stock of coal for the period between 20.11.2002 and 19.11.2003. Among other things, the policy covered damage caused by "Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation".
2.3 Due to heavy rains in Nimbahera on 29.08.2003 and 30.08.2003, some of the coal was washed off, and the stock of coal suffered damage. Consequently, on 01.09.2003, the Respondent informed the Appellant of the damage and requested the appointment of a surveyor. The surveyor so appointed submitted its report on 29.03.2004, assessing the loss caused to the Respondent at Rs.58,89,400/-.
2.4 Upon receiving such report, the Appellant sought a clarification from the surveyor, as to whether the loss could be said to have been caused by "Flood and Inundation" in terms of the wording of the insurance policy. The Appellant also hired a Chartered Accountant to verify the declarations submitted by the Respondent vis-à-vis its accounts books and daily stocks.
2.5 On 13.08.2004, the surveyor reaffirmed its stand that the losses in question were payable to the Respondent as per the terms and conditions of the policy. On the other hand, the Chartered Accountant hired by the Appellant reported on 02.09.2004 that he was unable to verify the declarations because the Respondent had not provided the necessary documents to him.
2.6 Notably, vide letter dated 14.12.2004, the Appellant repudiated the Respondent's claim on the ground that the loss caused to it did not fall within the scope of the policy, having occurred due to heavy and extraordinary rain and not 'flood' or 'inundation'.
2.7 Aggrieved by this repudiation, the Respondent filed a consumer complaint before the NCDRC seeking compensation to the tune of Rs. 1.32 crores. Vide the impugned order dated 18.11.2008, the NCDRC allowed the complaint to the extent of the loss assessed by the surveyor, i.e. Rs. 59,89,400/-, and directed the Appellant to pay the said amount along with interest at the rate of 9% per annum. The instant appeal has been filed by the Appellant against this order.
3. Heard learned counsel for the parties.
4. Learned counsel for the Appellant argued that the terms 'flood' and 'inundation' refer to two significantly different phenomena that cannot be equated with each other. He contended that the term 'flood' refers to overflowing of water bodies such as rivers, ponds, lakes etc. Accordingly, he submitted that since it was not the case of the Respondent that there was a water body near the factory which had over flown into the coal yard, the loss cannot be said to have been caused by a 'flood'. With respect to the term 'inundation', he argued that the same refers to 'accumulation of water' and could thus not be applied to the instant case as the coal had merely been washed off due to heavy rains.
5. Per contra, learned counsel for the Respondent submitted that even if the Appellant's definition of 'inundation' as 'accumulation of water' were to be accepted, the surveyor's report had clearly observed that that there was an accumulation of water in the coal yard, thereby making the policy applicable. Further, it was brought to our a
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